US raises $5,000bn balance sheet fears

Banks and other could be forced to bring up to $5,000bn (£2,500bn) onto the books if changes to the treatment of off-balance sheet vehicles are pushed through.

In the US, there are about $10,000bn of outstanding bonds backed by mortgages and other debt, but half of these could come on balance sheet, much to the concern of the Securities Industry and Financial Markets Association and the American Securitisation Forum.

The Financial Accounting Standards Board is currently looking at the standards governing off-balance sheet vehicles, but the two debt market trade bodies urged standard setters not to be too hasty in making changes.

SIFMA and the ASF wrote to FASB because they were concerned that there could be 'serious unintended consequences,' the FT reported.

'In particular, we do not believe that a year-end 2008 deadline is a necessary response to current market conditions. The risk of too much haste are high.'

Further reading:

Off balance sheet structures too risky